The Bank of Namibia (BoN) is expected to lower its repo rate from 6.75% to 6.50% at its Monetary Policy Committee meeting on 13 August, with easing inflation, stronger reserves and regional policy alignment creating room for a cut.
Simonis Storm junior economist Almandro Jansen said subdued price pressures, the South African Reserve Bank’s (SARB) July rate cut and the need to boost credit growth supported the case for easing.
“Our view is based on a combination of subdued inflation, regional policy alignment, the need to stimulate credit growth, and the importance of cushioning the economy against external trade shocks,” he said.
Inflation slowed to 3.5% in July from 3.7% in June, averaging 3.6% this year, at the lower end of the BoN’s 3–6% target range. Private sector credit growth reached 5.7% year-on-year in June, the fastest since early 2020, led by corporate borrowing, while household credit growth was 3.1%.
If implemented, a rate cut would lower interest costs for borrowers, reducing monthly repayments on loans such as mortgages, car finance and personal credit. It could also encourage new borrowing for investment and consumption.
However, savers would likely see reduced returns on fixed deposits and other interest-bearing accounts.
FNB Namibia expects the BoN to keep the repo rate at 6.75%, citing external risks and the need for policy prudence.
“If the BoN is comfortable maintaining the current 50bps differential in the near term, it may opt to cut earlier than expected to ease borrowing costs and support households and SMEs,” the bank said.
